Posted on 06/19/2008 6:12:21 AM PDT by jveritas
US regulators have announced plans to impose limits on oil trades overseas.
The US Commodity Futures Trading Commission said the London-based electronic exchange would have to comply with US rules.
The move comes as oil prices notch up record highs, amid fears that speculators are distorting the market. As a result, fuel costs have shot up hitting the global economy. Airlines have been hit badly, with near record losses expected for 2008 in the US.
US airlines were forecast to report $10bn (£5bn) of losses this financial year as sky-high fuel costs erode profits, according to the industry group Air Transport Association (ATA).
Oil prices slipped from their record highs near $140 a barrel reached during Monday trade as investors were cautious ahead of plans by Saudi Arabia to increase production in July.
US sweet, light crude finished down 60 cents at $134.01, while London Brent settled 99 cents lower at $133.72.
Read more at:
http://news.bbc.co.uk/2/hi/business/7460310.stm
>>given you only need to put up about 8 percent on margin for commodities futures, you can leverage the bejabbers out of any cash you put in. <<
That 8% leverage sounds great when price is rising, but it magnifies losses as well as gains. Speculators can lose much more than their original investment. Since the risk is so great, it is more prudent to speculate based upon actual fundamentals. One wrong guess and you’re out of business.
That’s why you see hedge funds disappear overnight.
ICE is an arm of the IPE, International Petroleum Exchange in London, which has been around for decades. London have ALL KINDS of regs, just not regs identical to US regs.
Particularly, IPE/ICE have no position limits and are all cash-settled contracts (I think...Brent might be delivery-settled).
Dubai is of course related to NYMEX. NYMEX' president sits on their board. However, it makes all the economic sense in the world to have a (major) exchange located in the heart of the biggest oil-producing area in the world. I can't get too wound up over conspiracies about nasty old Dubai, sorry.
The way you cure ICE/Dubai-style problems is ''transparency''; make 'em reveal who holds what positions, just like NYMEX. CFTC, to their credit, have reached an agreement with IPE/ICE on this very point. (Whether or not it will be enforced is a different question.)
The only truly odd thing about ICE, which is based in Atlanta, btw, is that it was **allowed** to operate under London regs in the first place. Must have been some kind of funny waiver, maybe from State or Commerce. Makes no sense to have done it this way, and this no doubt fires up the conspiracy crowd to some extent.
natural gas is very cheap and is plentiful in America. Also, genepax has come up with a way to run an electric car using one litre of water to go 50 miles. Check it out. The world’s economies will no longer be held ransom to the oil companies huge profits...yes, only a 10% profit margin, but considering they have a humungeous volume, they end up ripping us off and using market forces and the liberals to excuse it away. Alot of people, like Bill O’reilly see though the bs and are calling for more good alternatives to solve the problem.
Given that pension funds are investing on commodities index funds, that means they can be in for a very rude surprise if this happens.
But my main point was that somone with a 100 million dollars in cash can leverage that to over a billion in commodities positions. Makes market manipulation by speculation much more possible than the raw cash figures indicate.
So it’s the Oil Companies that control the World supply of Oil and NOT OPEC........
Who knew.....
Sad truth is that Obama probably will deliver change.
As thing probably will get MUCH WORSE because Democrats like him
will be sure to delay changes in drilling that we should have put
in place decades ago!
Sad truth is that Obama probably will deliver change.
As thing probably will get MUCH WORSE because Democrats like him
will be sure to delay changes in drilling that we should have put
in place decades ago!
They'll never move oil to a spot market. Was it a Democrat who suggested this?
May DM should stick to toes..............
If it wasn’t for speculators, our unemployment rate would pretty much perpetually be in the double-digits.
BOHICA
Your 37
That sounds like something Henry Bowman would do.
However bead one might think speculators have made the current situation, it is guaranteed to get worse with government intervention.
For example, government intervention in the exploration and delivery of oil to market is what put here in the first place. If they can't even grasp such simple concepts as supply and demand, what makes anyone think they can grasp the intricacies of the futures market?
“DRILL NOW, DRILL HERE, BUILD NUKES, BUILD COAL GASSIFICATION, DO IT ALL! ENERGY INDEPENDENCE NOW!”
A big AMEN to that!
You want ot end energy shortage (any shortages for that matter)? Have some stable and reasonable rules (environmental, fiscal, commerce) and let the freemarket loose and you’ll again see abundance.
Our energy crisis are the result of the straightjacket that we’ve put upon ourselves by letting the enviromarxists get control of our elected officials as well as our institutions.
It’s high time that us freedom lovers and responsible people retake both the high moral ground and control of our destiny, by exposing the greens for what they really are - humanity hating, elitists who’ve succeeded into “guilting” the majority of our population into following them into a world of misery.
No, it wouldn't. Futures trading in oil would simply move to a new location, to the long term detriment of the US commodity exchanges.
Who is Henery Bowman?
Citizen, we noticed you filled your gas tank yesterday before the price went up today, please proceed to the platform.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.